Education is the most powerful weapon you can use to change the world. That was true when Nelson Mandela said it in 2003, and it’s even more true today.
A college graduate today will earn nearly $1 million more on average over her lifetime than a person who has only graduated from high school. Education is critical to success in the 21st century economy. Yet for many young people, what determines whether they graduate from college is not whether they have the grades, but whether they have the money.
That is unacceptable in California.
College is too important to be available only to a lucky few. California must guarantee that every young person can afford to earn a college degree. The good news is we can do this with three targeted interventions, and none requires billions of taxpayer dollars.
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First, we must rein in the cost of college tuition.
Adjusting for inflation, tuition has nearly tripled at the University of California and Cal State schools over the past 20 years. I applaud UC President Janet Napolitano’s recent announcement that UC tuition will remain flat next year. But if we don’t increase efficiency, eventually tuition will have to go up again.
In negotiations over tuition, the Legislature must insist that UCs and CSUs maximize efficiency. In the past few years, UCs have saved over $426 million through the Working Smarter initiative, which reformed administrative and procurement practices. CSUs have saved $37 million by using new technologies and sharing network equipment. Continuing these efforts is critical to earn the public’s trust to invest in our public universities.
Second, no student should go bankrupt paying off a student loan.
The average UC and CSU student now leaves school with more than $18,000 of debt. Twice as many 2012 graduates are in default compared with 2003 graduates. Federal law requires lenders to offer repayment plans capped at 10 percent of borrowers’ income. But few take advantage of these plans. Often, loan servicers don’t advertise these plans.
According to the Consumer Financial Protection Bureau, some servicers provide inaccurate information – steering borrowers toward less-forgiving plans. California should require loan servicers to give clear and accurate information about income-based repayment plans, so students can choose plans that are best for them, not their loan servicers.
Another reason many people default is they don’t understand what they owe. In a 2015 Harris poll, two out of three college freshmen said they have no idea what they owe; most others underestimated their debt. Students should not become saddled with huge loans without understanding what they’re taking on. California should require UCs and CSUs to provide students basic education on financial literacy and loan repayment plans.
Third, we must ensure students who start college leave with a degree.
Today, only 60 percent of full-time students graduate within eight years. Graduation rates are lower for students of color and students from lower-income families. These students are still burdened with loans, but they don’t have degrees to help them get jobs.
Ohio, Wisconsin and Florida have found targeted grants of a couple thousand dollars to lower-income students can substantially increase graduation rates. Researchers at Stanford and elsewhere have shown social-support programs can reduce racial gaps in academic performance. California should pursue targeted, evidence-based investments like these to help more students make it to graduation.
The equation is simple: California cannot lead the 21st-century economy if our young people cannot afford a college degree. This is an economic imperative, as well as a moral one. And it’s a challenge we can meet without saddling taxpayers with an enormous bill. It is time for Democrats and Republicans to come together to guarantee that every young person in California can afford a college degree.
Steve Westly is the former California state controller and the founder of the Westly Group, a clean-tech venture capital firm.